TOBACCO SA Presentation by the TISA Chairman/CEO to the Portfolio Committee on Health at the Public Hearings on the Tobacco Products Control Amendment

TOBACCO SATOBACCO SA

Presentation by the TISA Chairman/CEO to the Presentation by the TISA Chairman/CEO to the Portfolio Committee on Health at the Public Hearings on the Portfolio Committee on Health at the Public Hearings on the

Tobacco Products Control Amendment Bill, no 24 of 2006Tobacco Products Control Amendment Bill, no 24 of 200623 JANUARY 2007 23 JANUARY 2007

Tobacco Institute of SA Tobacco Institute of SA (TISA)(TISA)

• Represents more than 98% of legal Represents more than 98% of legal industry in SA.industry in SA.

• Represents Manufacturers, Leaf Dealers, Represents Manufacturers, Leaf Dealers, Tobacco Farmers.Tobacco Farmers.

• All views of TISA always balanced to All views of TISA always balanced to represent the wider interests and positions represent the wider interests and positions of the entire industry. of the entire industry.

Content of PresentationContent of Presentation

• Brief Introduction to S.A. Tobacco IndustryBrief Introduction to S.A. Tobacco Industry• Challenges/Obstacles for the IndustryChallenges/Obstacles for the Industry• Industry view on Tobacco Control LegislationIndustry view on Tobacco Control Legislation• Consequences of high taxes and over- Consequences of high taxes and over-

regulationregulation• Our input re Bill 24 of 2006Our input re Bill 24 of 2006• Myths/Disinformation about the IndustryMyths/Disinformation about the Industry• ConclusionConclusion

SA TOBACCO SA TOBACCO INDUSTRYINDUSTRY

INTRODUCTIONINTRODUCTION• Tobacco world-wide > 500 years oldTobacco world-wide > 500 years old• Tobacco in SA : 350 years oldTobacco in SA : 350 years old• Industry in SA: Seed to smoke; cigarettes and pipe Industry in SA: Seed to smoke; cigarettes and pipe

tobacco productstobacco products

Pre-1994Pre-1994• Government controlled marketing of agricultural Government controlled marketing of agricultural

products in SAproducts in SA• Government assistance to farmers, minimal tobacco Government assistance to farmers, minimal tobacco

control legislationcontrol legislation• Illegal trade almost non-existent in SAIllegal trade almost non-existent in SA

After 1994After 1994• Free market introducedFree market introduced

• Tobacco in SA globalisedTobacco in SA globalised

• Farmers had to compete on world market against fair and unfair Farmers had to compete on world market against fair and unfair competition (Government subsidies)competition (Government subsidies)

• Manufacturers of tobacco products became multi-national playersManufacturers of tobacco products became multi-national players

• Competition in cigarette market increased dramatically due to many Competition in cigarette market increased dramatically due to many new entrants into the marketnew entrants into the market

• Multi national leaf dealers entered SA market, introducing SA tobacco Multi national leaf dealers entered SA market, introducing SA tobacco leaf to other countries in the world, earning valuable forex for SA.leaf to other countries in the world, earning valuable forex for SA.

• Tobacco farmers decreased from >1000 to 300 currently, only the Tobacco farmers decreased from >1000 to 300 currently, only the best farmers survived all the changes.best farmers survived all the changes.

Implication of ChangesImplication of Changes

• Production of FCV declined from >30 mill kg to 12 mill Production of FCV declined from >30 mill kg to 12 mill kg, 15 000 job losses on farms.kg, 15 000 job losses on farms.

• Production of DAC decreased from 6 mill kg to 3 mill Production of DAC decreased from 6 mill kg to 3 mill kg, 2 000 job losseskg, 2 000 job losses

• Main reasons: Main reasons: globalisation of SA Industry (competitive issues, strong globalisation of SA Industry (competitive issues, strong

local currency)local currency) drastic increase in tobacco control measures, (4X in 10 drastic increase in tobacco control measures, (4X in 10

years), bringing 1years), bringing 1stst world legislation into a developing world legislation into a developing economy, exceeding requirements of FCTC.economy, exceeding requirements of FCTC.

dramatic increase in tobacco taxes, (440% in 10 yrs)dramatic increase in tobacco taxes, (440% in 10 yrs) huge growth in illegal trade (0 to >20% in 10 yrs) huge growth in illegal trade (0 to >20% in 10 yrs)

TOBACCO IN SOUTH TOBACCO IN SOUTH AFRICAAFRICA

Farming IndustryFarming Industry

• One of the most labour intensive One of the most labour intensive crops in the agricultural sectorcrops in the agricultural sector

• 300300 farmers farmers • 20 00020 000 workers workers

• ++ 80 000 80 000 dependents making a dependents making a living in deep rural areasliving in deep rural areas

• 6 0006 000 hectares hectares

• 60-70%60-70% of tobacco used in SA of tobacco used in SA for manufacturing high quality for manufacturing high quality products.products.

WESTERN CAPEWESTERN CAPE

NORTHERN CAPE

EASTERN CAPE

FREE STATE

KZN

MPUMALANGA

LIMPOPO

NORTH WEST GAUTENG

NAMIBIA

BOTSWANA

ZIMBABWE

LESOTHO

SOUTH AFRICA:

TOBACCO GROWING REGIONS =

WESTERN CAPEWESTERN CAPE

NORTHERN CAPE

EASTERN CAPE

FREE STATE

KZN

MPUMALANGA

LIMPOPO

NORTH WEST GAUTENG

NAMIBIA

BOTSWANA

ZIMBABWE

LESOTHO

SOUTH AFRICAN TOBACCO

Total Production 2005/06:

14 850 t

Flue-cured:

12 500 t

Air-cured:

2 350 t

MANUFACTURING MANUFACTURING INDUSTRYINDUSTRY

• British American Tobacco (manufacturing in SA, British American Tobacco (manufacturing in SA, investment, jobs, exports, etc) investment, jobs, exports, etc)

• Swedish Match (manufacturing in SA, investment, jobs, Swedish Match (manufacturing in SA, investment, jobs, exports, etc)exports, etc)

• Japan Tobacco International (manufacturing in SA, Japan Tobacco International (manufacturing in SA, investment, jobs etc) investment, jobs etc)

• Phillip Morris International (import products)Phillip Morris International (import products)• Gallaher SA (manufacturing in SA, investment, jobs, Gallaher SA (manufacturing in SA, investment, jobs,

exports etc)exports etc)• All above are multi-national companiesAll above are multi-national companies• Many more smaller manufacturers and importers creating Many more smaller manufacturers and importers creating

jobs, exporting products, investing in the SA economy. jobs, exporting products, investing in the SA economy.

KEY STATISTICSKEY STATISTICS

Manufacturing IndustryManufacturing Industry

• >R 8 billion to Government (VAT & >R 8 billion to Government (VAT & Excise duties) in 2005, (2% of total Excise duties) in 2005, (2% of total Government income)Government income)

• 52% tax incidence on tobacco products52% tax incidence on tobacco products

• ++ 35 billion sticks manufactured in SA 35 billion sticks manufactured in SA per yearper year

• Pipe tobacco products equates to Pipe tobacco products equates to ++ 4 billion sticks more 4 billion sticks more

• 3 000 employees in manufacturing 3 000 employees in manufacturing industryindustry

• Turn-over manufacturing Turn-over manufacturing industry >R 17 billionindustry >R 17 billion

• ++ 5 million adult smokers 5 million adult smokers (22% to 25% of adults)(22% to 25% of adults)

• Consumption of legal Consumption of legal products products ++ 25 billion 25 billion sticks/yearsticks/year

• Consumption of legal Consumption of legal products declining, (30% in products declining, (30% in 10 yrs), more consumers 10 yrs), more consumers buying illegal products, total buying illegal products, total consumption probably very consumption probably very stable or even increasing.stable or even increasing.

MAJOR CHALLENGES FOR MAJOR CHALLENGES FOR SA INDUSTRYSA INDUSTRY

To remain relevant, growing and competitive in the long To remain relevant, growing and competitive in the long term, the industry will have to deal with:term, the industry will have to deal with:

• Tight regulation by GovernmentTight regulation by Government• Increasing excise dutiesIncreasing excise duties• Growth in the illegal tradeGrowth in the illegal trade• Declining legal local marketDeclining legal local market• Proper dialogue between DOH, other stakeholders and Proper dialogue between DOH, other stakeholders and

industry is non-existent. Not the way it should in a industry is non-existent. Not the way it should in a democracy, tobacco is targeted unfairly.democracy, tobacco is targeted unfairly.

• Farmers and labourers suffering consequences of Farmers and labourers suffering consequences of government actions against tobacco in deep rural areas. It is government actions against tobacco in deep rural areas. It is not that easy to change to other commodities.not that easy to change to other commodities.

WHAT IS THE BIG DEBATE WHAT IS THE BIG DEBATE ON TOBACCO ALL ABOUT?ON TOBACCO ALL ABOUT?

• Simply because the industry produces a product that Simply because the industry produces a product that comes with health risks.comes with health risks.

• Industry view-point:Industry view-point:– Acknowledge the health risks associated with smoking, Acknowledge the health risks associated with smoking,

therefore industry and use of products need to be regulatedtherefore industry and use of products need to be regulated– Tobacco is addictiveTobacco is addictive– To smoke is a choice to be made by adults over 18To smoke is a choice to be made by adults over 18– Against youth smokingAgainst youth smoking– People can and do quit smokingPeople can and do quit smoking– Harm reduced products need to be given more attentionHarm reduced products need to be given more attention

WHAT IS THE OTHER SIDE WHAT IS THE OTHER SIDE OF TOBACCO?OF TOBACCO?

• Substantial economic, social benefits worldwide.Substantial economic, social benefits worldwide.

• Livelihood for 100 million people worldwide.Livelihood for 100 million people worldwide.

• Billions of dollars to governments worldwide.Billions of dollars to governments worldwide.

• Powerful industry creating infrastructure, jobs, social Powerful industry creating infrastructure, jobs, social upliftment, environmental upliftment.upliftment, environmental upliftment.

• Important industry in SA context where jobs in rural Important industry in SA context where jobs in rural areas, infrastructure, investment from multi-nationals, areas, infrastructure, investment from multi-nationals, taxes, etc, are crucial factors for building the country.taxes, etc, are crucial factors for building the country.

• Most important crop in many African countries. (Malawi, Most important crop in many African countries. (Malawi, Uganda, Tanzania, Zambia, still in Zimbabwe, Uganda, Tanzania, Zambia, still in Zimbabwe, Mozambique and others)Mozambique and others)

WHAT IS THE OTHER SIDE WHAT IS THE OTHER SIDE OF TOBACCO?OF TOBACCO?

• 1 billion smokers worldwide enjoying the habit of smoking 1 billion smokers worldwide enjoying the habit of smoking

• Industry supports sensible regulation on tobacco products, work Industry supports sensible regulation on tobacco products, work with Governmentwith Government

• Industry seeking balanced debate between health, economic and Industry seeking balanced debate between health, economic and social issues through constructive dialoguesocial issues through constructive dialogue

• Governments have a choice: Deal with a legal industry which is Governments have a choice: Deal with a legal industry which is willing to co-operate, or deal with a faceless illegal industry run by willing to co-operate, or deal with a faceless illegal industry run by ruthless syndicates with attitude of “catch me if you can”. They don’t ruthless syndicates with attitude of “catch me if you can”. They don’t pay taxes, don’t comply with legislation, grow a huge market share pay taxes, don’t comply with legislation, grow a huge market share at the expense of the legal industryat the expense of the legal industry

EXCISE DUTIESEXCISE DUTIES

EXCISE DUTIESEXCISE DUTIESTaxation per pack of 20 cigarettes

Most popular price class

1.71 1.65

0.34 0.41 0.45 0.60 0.77 0.92 0.98 1.06 1.19 1.32 1.49

5.565.05

0.71 0.88 1.04

1.58

2.04 2.45

2.83 3.17

3.51 3.89

4.53

R 0.00

R 1.00

R 2.00

R 3.00

R 4.00

R 5.00

R 6.00

R 7.00

R 8.00

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Excise

VAT

1996 – 2006: Excise tax increased by almost 440%

Price vs Volume of legal Price vs Volume of legal productsproducts

R 0.00

R 2.00

R 4.00

R 6.00

R 8.00

R 10.00

R 12.00

R 14.00

R 16.00

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Price Volume: billion sticks

EXCISE DUTIES…/EXCISE DUTIES…/

• Tax incidence on SA tobacco products 52%, pressure Tax incidence on SA tobacco products 52%, pressure for further increases.for further increases.

• One of main reasons for decline in legal products, One of main reasons for decline in legal products, increase in illegal trade.increase in illegal trade.

• Legal products decline by Legal products decline by ++ 3% per year. 3% per year.• Alarming growth in illegal trade (already more than Alarming growth in illegal trade (already more than

20% of market), growing rapidly.20% of market), growing rapidly.• Government and Industry both losing >R1 billion Government and Industry both losing >R1 billion

annually due to illegal trade. annually due to illegal trade. • Industry working with Government to find solutions, Industry working with Government to find solutions,

intensity of cooperation needs to be increased.intensity of cooperation needs to be increased.

ILLEGALILLEGAL TRADETRADE

Shocking StatisticsShocking Statistics• More than 10 million illegal cigarettes sold in SA daily.More than 10 million illegal cigarettes sold in SA daily.

• Almost 4 billion sticks in a year, which should have been sold by the Almost 4 billion sticks in a year, which should have been sold by the legitimate industry.legitimate industry.

• Estimated more than R1 billion loss in revenue for Government, Estimated more than R1 billion loss in revenue for Government, similar losses for legitimate industry. similar losses for legitimate industry.

• Currently illegal trade estimated at around 20% of total market and Currently illegal trade estimated at around 20% of total market and growing, almost non existent 10 years ago.growing, almost non existent 10 years ago.

• Affects cigarette and pipe tobacco manufacturers, legal importers, Affects cigarette and pipe tobacco manufacturers, legal importers, leaf dealers, tobacco farmers, government, smokers, wholesalers, leaf dealers, tobacco farmers, government, smokers, wholesalers, retailers, transporters, general public etc. retailers, transporters, general public etc.

Illegal Trade as CompetitorIllegal Trade as Competitor

If ranked as a tobacco company,

ILLEGAL TRADEILLEGAL TRADE would rank as third in the market place. It is everyone's biggest competitor.

Effects of the illegal Effects of the illegal tradetrade

• Loss in revenue for GovernmentLoss in revenue for Government

• Growth in organised crimeGrowth in organised crime

• Stimulates consumption through lower pricesStimulates consumption through lower prices

• Illegal products do not comply with regulationsIllegal products do not comply with regulations

• Trade mark infringementTrade mark infringement

• Greater health risks to the smoking publicGreater health risks to the smoking public

• Government not achieving its health objectivesGovernment not achieving its health objectives

Youth Smoking Youth Smoking PreventionPrevention

YSPYSP• Longstanding view of industry Longstanding view of industry

– age of sale from 16 to 18 – age of sale from 16 to 18

• Retail Awareness Programme Retail Awareness Programme launched March 2003, launched March 2003, strengthened in 2004, again in strengthened in 2004, again in 2005 and 2006.2005 and 2006.

• Message: ‘No Cigarettes to Message: ‘No Cigarettes to Under 18s’Under 18s’

• More than 18 000 retailers More than 18 000 retailers received materialreceived material

• Positive feedback, incl various Positive feedback, incl various Government stakeholdersGovernment stakeholders

YSP: RETAIL AWARENESS PROGRAMMEYSP: RETAIL AWARENESS PROGRAMME

NEW LOOK AS OF 2006NEW LOOK AS OF 2006

TOBACCO CONTROL TOBACCO CONTROL LEGISLATION LEGISLATION

IN IN

SOUTH AFRICASOUTH AFRICA

Brief BackgroundBrief Background• First tobacco control act introduced in 1993, with regulations First tobacco control act introduced in 1993, with regulations

in 1994, act amended in 1999, more regulations in 2000.in 1994, act amended in 1999, more regulations in 2000.

• Tobacco industry in SA already operating in a very Tobacco industry in SA already operating in a very restrictive regulatory environment.restrictive regulatory environment.

• TISA supports the need for the tobacco industry and the use TISA supports the need for the tobacco industry and the use of tobacco products to be regulated.of tobacco products to be regulated.

• During FCTC negotiations, the SA DOH drove the agenda During FCTC negotiations, the SA DOH drove the agenda for Africa.for Africa.

• SA one of the first countries to sign FCTC on 16 June 2003, SA one of the first countries to sign FCTC on 16 June 2003, ratified 19 April 2005.ratified 19 April 2005.

Brief BackgroundBrief Background

• MOH introduced a further draft bill on tobacco control in MOH introduced a further draft bill on tobacco control in October 2003, one of main aims to ‘align with FCTC’.October 2003, one of main aims to ‘align with FCTC’.

• A period of one month was given for comment. Over A period of one month was given for comment. Over 2000 submissions were received incl from tobacco 2000 submissions were received incl from tobacco industry.industry.

• Revised draft was made available in Parliament in June Revised draft was made available in Parliament in June 2006. 2006.

SPLITTING OF BILLSPLITTING OF BILL

• After advice of Parliamentary Law Advisors, After advice of Parliamentary Law Advisors, it was decided that the Bill be split into two, it was decided that the Bill be split into two, a Section 75 Bill dealing with issues not a Section 75 Bill dealing with issues not affecting provinces and a Section 76 Bill, affecting provinces and a Section 76 Bill, issues affecting provinces.issues affecting provinces.

SECTION 75 BILLSECTION 75 BILLMain Issues for TISAMain Issues for TISA

ISSUE:ISSUE:• Amendment to definition of Amendment to definition of Tobacco ProductTobacco Product to to

include all tobacco products including ‘snus’ include all tobacco products including ‘snus’

TISA VIEW:TISA VIEW:• Harm-reduced products like especially ‘snus’, Harm-reduced products like especially ‘snus’,

but also other smokeless products, need but also other smokeless products, need separate regulation, and should not be treated separate regulation, and should not be treated the same as cigarettes. the same as cigarettes.


ISSUE:ISSUE:• Amendment to definition of Amendment to definition of Organised ActivityOrganised Activity to to

include the name of a tobacco product include the name of a tobacco product manufacturer.manufacturer.

TISA VIEW:TISA VIEW: • May prohibit manufacturers from using company May prohibit manufacturers from using company

name in doing normal business, (names on name in doing normal business, (names on buildings, letterheads, advertising for jobs, etc) or buildings, letterheads, advertising for jobs, etc) or organising corporate events to which only organising corporate events to which only suppliers and stakeholders are invited.suppliers and stakeholders are invited.


ISSUE:ISSUE:• Amendment to definition of Amendment to definition of Brand ElementBrand Element..

TISA VIEW:TISA VIEW: • Definition should be deleted and included in the Definition should be deleted and included in the

proposed Section 76 Bill. It should be dealt with proposed Section 76 Bill. It should be dealt with alongside definitions of alongside definitions of AdvertisementAdvertisement and and PromotionPromotion, as was the case before the Bill was , as was the case before the Bill was split. It makes no sense as a stand alone.split. It makes no sense as a stand alone.


ISSUE:ISSUE:• If no If no product and testing standardsproduct and testing standards

exists in the export country, SA’s exists in the export country, SA’s prescribed standards apply.prescribed standards apply.

TISA VIEW:TISA VIEW:• SA should not seek to impose its SA should not seek to impose its

standards on foreign jurisdictions.standards on foreign jurisdictions.


ISSUE:ISSUE: • Carte blanche powers to the MinisterCarte blanche powers to the Minister to to

regulate on any matter as he/she sees fit to regulate on any matter as he/she sees fit to achieve the objectives of the legislation. achieve the objectives of the legislation.

TISA VIEW:TISA VIEW:• Parliament will abdicate its watchdog role, does Parliament will abdicate its watchdog role, does

not bode well for future of a democracy. The not bode well for future of a democracy. The HPC should always have the final say and will HPC should always have the final say and will lose it if you pass this as proposed.lose it if you pass this as proposed.


ISSUE:ISSUE: • The introduction of The introduction of low ignition propensitylow ignition propensity

cigarettes.cigarettes.

TISA VIEW:TISA VIEW:• The introduction of LIP cigarettes, should only The introduction of LIP cigarettes, should only

be done on the basis of extensive consultation be done on the basis of extensive consultation and research and research inter aliainter alia taking into account taking into account prevailing capacity in this country.prevailing capacity in this country.

INDUSTRY EFFORTSINDUSTRY EFFORTS

Our message to the Committee:Our message to the Committee: We fully accept that the industry and use of tobacco We fully accept that the industry and use of tobacco products must be regulated, but we need balance. Over-products must be regulated, but we need balance. Over-regulation of the legal industry leads to further growth in regulation of the legal industry leads to further growth in illegal trade.illegal trade.

Consequence:Consequence: Legal industry will eventually be severely Legal industry will eventually be severely strangled, even battle to survive. If this happens, strangled, even battle to survive. If this happens, Government will not achieve any of its health objectives, Government will not achieve any of its health objectives, and will have to try and deal with rogue traders. and will have to try and deal with rogue traders. Consumers will use products of which the origin, quality Consumers will use products of which the origin, quality standards etc are unknown, which will increase health standards etc are unknown, which will increase health impact. Total consumption can even increase.impact. Total consumption can even increase.

Myths/Disinformation about Myths/Disinformation about the Tobacco Industrythe Tobacco Industry

• The link between over regulation, high taxes and The link between over regulation, high taxes and illegal trade is serious and it affects the illegal trade is serious and it affects the achieving of the good intentions of tobacco achieving of the good intentions of tobacco control legislation. This needs serious discussion control legislation. This needs serious discussion and proper measures.and proper measures.

• The perception created by the NCAS that stricter The perception created by the NCAS that stricter control measures and higher taxes will not harm control measures and higher taxes will not harm the economy or cause job loss, is totally untrue. I the economy or cause job loss, is totally untrue. I will show you the reality and expose this will show you the reality and expose this propagandistic statement.propagandistic statement.

Myths/DisinformationMyths/Disinformation• The policy of the NCAS is not to talk to the tobacco industry, yet they The policy of the NCAS is not to talk to the tobacco industry, yet they

claim to be industry experts, how is this possible?claim to be industry experts, how is this possible?

• They make sweeping and unsubstantiated statements all the time, They make sweeping and unsubstantiated statements all the time, which are emotionally presented to cover their ignorance. It’s time the which are emotionally presented to cover their ignorance. It’s time the HPC and DOH start challenging them on many of these issues.HPC and DOH start challenging them on many of these issues.

• While the industry has moved forward, the NCAS still stick to While the industry has moved forward, the NCAS still stick to arguments which are 30 yrs old and so predictable. (youth, smuggling, arguments which are 30 yrs old and so predictable. (youth, smuggling, economics, science of the product etc, etc)economics, science of the product etc, etc)

• The only reason why one wouldn’t engage with a major industry, is The only reason why one wouldn’t engage with a major industry, is because you feel threatened to hear the truth. Where would all of us because you feel threatened to hear the truth. Where would all of us be if Nelson Mandela never engaged with F.W. de Klerk?be if Nelson Mandela never engaged with F.W. de Klerk?

• The only solution in sustainable tobacco control legislation will be The only solution in sustainable tobacco control legislation will be found in the principle of ALL stakeholders sitting around the same found in the principle of ALL stakeholders sitting around the same table and work towards workable solutions. table and work towards workable solutions.

Myths/DisinformationMyths/Disinformation

““Tobacco control policies will not harm Tobacco control policies will not harm the economy or cause job losses”the economy or cause job losses”

• Legal tobacco product volumes have declined by a third Legal tobacco product volumes have declined by a third over the past 10 years. over the past 10 years.

• During this period, 12000-15000 direct job losses have During this period, 12000-15000 direct job losses have occurred in the farming industry negatively affecting the occurred in the farming industry negatively affecting the livelihoods of around 40 000 people in our rural areas.livelihoods of around 40 000 people in our rural areas.

• The largest cigarette manufacturer is closing down a The largest cigarette manufacturer is closing down a factory in Paarl this year as a direct consequence of factory in Paarl this year as a direct consequence of declining volumes with more than 400 mostly bread declining volumes with more than 400 mostly bread winners losing their jobs. winners losing their jobs.


““The tobacco industry is involved in smuggling.”The tobacco industry is involved in smuggling.”

• Illicit trade in tobacco products is the single biggest threat to the legal Illicit trade in tobacco products is the single biggest threat to the legal tobacco industry in SA.tobacco industry in SA.

• Tobacco has for some time and currently still is one of the main focus Tobacco has for some time and currently still is one of the main focus areas of SARS. areas of SARS.

• The SA tobacco industry works closely with the SA Revenue Services The SA tobacco industry works closely with the SA Revenue Services to combat illicit trade in tobacco products.to combat illicit trade in tobacco products.

• The industry is regularly audited by SARS and found to be fully The industry is regularly audited by SARS and found to be fully compliant with all relevant tax legislation.compliant with all relevant tax legislation.

• SARS have concluded that illicit trade is driven by organised crime SARS have concluded that illicit trade is driven by organised crime syndicates and not the legal tobacco industry in SA. syndicates and not the legal tobacco industry in SA.


““A cigarette manufacturer can add anything A cigarette manufacturer can add anything it wishes to cigarettes without any it wishes to cigarettes without any regulatory oversight”.regulatory oversight”.

• Within the tobacco industry very high Within the tobacco industry very high standards have to be adhered to from the standards have to be adhered to from the tobacco seed right through to the end tobacco seed right through to the end product.product.


““Manufacturers can add up to 1400 chemicals Manufacturers can add up to 1400 chemicals to Tobacco”to Tobacco”

When will the DOH accept our invitation to come and When will the DOH accept our invitation to come and see firsthand what happens in a factory before see firsthand what happens in a factory before making claims which are sensational and unfounded. making claims which are sensational and unfounded. Why don’t you make the effort to visit tobacco farms, Why don’t you make the effort to visit tobacco farms, processing factories, meet the tobacco people, processing factories, meet the tobacco people, engage in a proper and democratic way. Tobacco engage in a proper and democratic way. Tobacco people are not people with horns, knob kieries etc to people are not people with horns, knob kieries etc to kill other people. kill other people.


““Manufacturers can add up to 1400 chemicals to Tobacco”Manufacturers can add up to 1400 chemicals to Tobacco”

• There are many questions and misconceptions on how There are many questions and misconceptions on how tobacco products and specifically cigarettes are tobacco products and specifically cigarettes are manufactured.manufactured.

• Some of these questions could be answered here today, but Some of these questions could be answered here today, but not all, given the technical nature of the process. not all, given the technical nature of the process.

• Honorable Members of this Committee have the right to Honorable Members of this Committee have the right to know the facts and therefore it is proposed that the know the facts and therefore it is proposed that the Committee afford an opportunity to an expert at separate Committee afford an opportunity to an expert at separate occasion to explain the process and clear up any occasion to explain the process and clear up any misconceptions.misconceptions.

Myths/ DisinformationMyths/ DisinformationManufacturers can add up to 1400 chemicals to Tobacco”Manufacturers can add up to 1400 chemicals to Tobacco”

• A simple example: Many people are under the impression that there A simple example: Many people are under the impression that there are jars of tar and nicotine in a cigarette factory which is poured are jars of tar and nicotine in a cigarette factory which is poured onto the tobacco during the manufacturing process.onto the tobacco during the manufacturing process.

• This is not correct.This is not correct.

• Nicotine occurs naturally in the tobacco plant.Nicotine occurs naturally in the tobacco plant.

• Tar is formed when a tobacco product is smoked. Tar is formed when a tobacco product is smoked.

• Some of the Honorable Members present here today had the Some of the Honorable Members present here today had the opportunity to visit a cigarette factory and view the manufacturing opportunity to visit a cigarette factory and view the manufacturing process. We would like to extend an invitation to Honorable process. We would like to extend an invitation to Honorable Members of this Committee to visit a tobacco farm, visit a Members of this Committee to visit a tobacco farm, visit a processing plant, a cigarette factory. processing plant, a cigarette factory.


• ““We have consulted with the industry”.We have consulted with the industry”. • Depending on what we see as Depending on what we see as

consultation, this needs serious attention consultation, this needs serious attention by the DOH. Until today, a major industry by the DOH. Until today, a major industry like the Tobacco Industry couldn’t secure a like the Tobacco Industry couldn’t secure a meeting with the MOH. I seriously request meeting with the MOH. I seriously request the HPC to facilitate genuine engagement the HPC to facilitate genuine engagement between the DOH and the industry in a between the DOH and the industry in a constructive way like the DTI and the DOAconstructive way like the DTI and the DOA


““Snus”, even as a new product, should be Snus”, even as a new product, should be damned and regulated like all products.damned and regulated like all products.

• Honorable members of this Committee have the Honorable members of this Committee have the right to know what right to know what snussnus is and how it is is and how it is manufactured. Here again it is necessary that manufactured. Here again it is necessary that an expert address the Committee and we an expert address the Committee and we respectfully request that an opportunity be respectfully request that an opportunity be afforded for an expert at a separate occasion to afforded for an expert at a separate occasion to address the Committee in this regard.address the Committee in this regard.

CONCLUSIONCONCLUSION• We remain committed to working with all stakeholders to ensure that we We remain committed to working with all stakeholders to ensure that we

have fair, practical, workable and enforceable legislation.have fair, practical, workable and enforceable legislation.

• We need to develop legislation that can work for SA, not bring across blue We need to develop legislation that can work for SA, not bring across blue prints from other countries with different circumstances. (Where is our law prints from other countries with different circumstances. (Where is our law applied)applied)

• Our current legislation is working well and very progressive, we rather Our current legislation is working well and very progressive, we rather need better enforcement than another major overhaul in legislationneed better enforcement than another major overhaul in legislation

• We support separate, carefully researched legislation re snus and other We support separate, carefully researched legislation re snus and other smokeless products.smokeless products.

• If the relatively minor changes we have proposed are made, we will not If the relatively minor changes we have proposed are made, we will not object to the passing of the Section 75 Bill.object to the passing of the Section 75 Bill.

THANK YOU AND THANK YOU AND BEST WISHESBEST WISHES

Documents

TOBACCO SA Presentation by the TISA Chairman/CEO to the Portfolio Committee on Health at the Public Hearings on the Tobacco Products Control Amendment